(FORTUNE Magazine) - Last year, when Syrian intelligence operatives were implicated in the assassination of former Lebanese Prime Minister Rafik Hariri, their motive seemed clear: to
neutralize a political opponent of Syria's three-decade occupation of Lebanon.

But United Nations investigators and other sources have told FORTUNE there may have been an additional reason for the hit. The February 2005 car bombing in Beirut, the sources say,
may have been partly intended to cover up a corruption and bank fraud scandal that siphoned hundreds of millions of dollars to top Syrian and Lebanese officials.

Bank documents, court filings, and interviews with investigators and other sources show that some of the officials were deeply involved from the late 1990s until early 2003 in a
kickback scheme that supplied them with cash, real estate, cars, and jewelry in exchange for protecting and facilitating a multibillion-dollar money-laundering operation at Lebanon's
Bank al-Madina that allowed terrorist organizations, peddlers of West African "blood diamonds," Saddam Hussein, and Russian gangsters to hide income and convert hot money into
legitimate bank accounts around the world.

Despite efforts to cover up the details surrounding the bank's collapse in early 2003, these sources say, the Syrian and Lebanese officials allegedly involved in the fraud feared that
Hariri could return to power and reveal their role in one of the biggest illegal banking operations in the Middle East since the Bank of Credit & Commerce International scandal in
the early 1990s.

"Was the scandal part of the reason Hariri was killed?" asks Marwan Hamade, Lebanon's Minister of Telecommunications and a Hariri confidant who was himself the target of a car-bomb
assassination attempt. "Absolutely. It was certainly one of the cumulative reasons. If he had been reelected, Hariri would have reopened the file, which we know goes directly to
[Syrian President Bashar] Assad through the [Lebanese] presidential palace in Baabda."

UN investigators looking into Hariri's death, led by German prosecutor Detlev Mehlis, became interested in the link to al-Madina on the suspicion that money stolen from the bank
helped fund the plot, says a Lebanese security source who helped investigate the bank's collapse and later worked with the UN team.

After reviewing some of the banking records of suspects in both Syria and Lebanon, says the source, who asked not to be identified as he isn't authorized to talk about the matter, the
UN team started looking into whether at least some of the plotters were motivated by a desire to obscure their roles in the al-Madina affair. "It goes all the way to the top people in
Syria," the source says.

Mehlis's reports on the assassination make reference to financial fraud as a possible motive. "Fraud, corruption, and money laundering could have been motives for individuals to
participate in the operation that ended with the assassination of Mr. Hariri," Mehlis wrote last December in his second report, referring specifically to the collapse of al-Madina.

Mehlis, who would not be interviewed, also mentioned in his report a taped conversation in which General Rustom Ghazali, Syria's top military official in Lebanon, accused Hariri of
discussing Syrian corruption in a newspaper interview, apparently in violation of an agreement to remain quiet on the matter. In late April, noting UN findings, President George W.
Bush ordered a freeze on assets held in the U.S. by anyone involved in the assassination, though the order did not cite names.

As part of the power struggle that ensued after Assad extended the term of Lebanese President and Syrian ally Emile Lahoud in 2004, Hariri resigned as Prime Minister with the
intention of running for Parliament on an anti-Syrian platform. Hariri confidants say that, once returned to power, he planned to reopen the investigation into the bank's collapse.
The case file and a trove of supporting documents were sealed in the vault of Lebanon's Central Bank in 2003 after threats by Ghazali, who appears to have made millions of dollars
from the scheme himself.

The Syrian occupation of Lebanon from 1976 to 2005 has long been viewed as a geopolitical move designed to stabilize its smaller neighbor after decades of civil war and create a
bargaining chip in the Arab-Israeli conflict. But over time, the occupation turned into a moneymaking operation for Syrian elites and their Lebanese allies.

"When the Syrians came to Lebanon," says Adnan Araki, a former Lebanese member of Parliament and Syrian loyalist, "they wanted the Golan Heights back and considered Lebanon and
Hezbollah something to bargain with. We had to teach them how to steal."

Investigators looking into the looting at Bank al-Madina got a break in March, when Brazilian police arrested Rana Koleilat, al-Madina's former executive secretary. Koleilat, who
jumped bail in Lebanon last year and eluded an international manhunt, is believed to have played a key role in the bank scandal.

She is alleged in lawsuits brought by the bank's owners to have used false withdrawals and bogus loans to enrich her family and pay off authorities. Even as al-Madina failed, she is
said by investigators to have extracted millions of dollars from owner Adnan Abou Ayyash, a construction magnate who lives in Saudi Arabia, through a series of wire transfers and
check exchanges. Koleilat denied the charges after her capture and said that the bank's owners had authorized all withdrawals and that Ghazali had blackmailed her into paying him for
protection.

When the dust settled in the summer of 2003, after depositors were paid and assets liquidated, the Abou Ayyash family found itself about $1.5 billion poorer, a stunning turn of events
for a Lebanese family that controlled a vast business empire. But as Koleilat and the Abou Ayyash brothers sued and countersued and the Central Bank grabbed whatever money was left to
pay depositors, it became clear that no investigation would be forthcoming. The money was gone, and only questions remained, questions whose answers were locked away in a vault in the
Central Bank.

In an interview last year, Central Bank governor Riad Salameh didn't deny reports that Ghazali had threatened him into closing the investigation. The general's family, records
produced by the bank appear to show, got more than $32 million from al-Madina via transfers approved by Koleilat. But with a pro-Syrian Parliament and Justice Minister in place,
then--Prime Minister Hariri was unable to force an investigation beyond the initial 2003 fraud claims.

It is only recently, a year after the departure of Syrian troops, that the bank files have been transferred to the Ministry of Justice for a proper investigation into how the money
was stolen and who benefited from the bribes. Just a handful of bank documents have emerged, but they detail an impressive pattern of corruption and fraud on the part of Syrian
political and security officials and their Lebanese allies.

Critical evidence of the extent of the money-laundering operation was unintentionally revealed during an investigation by the U.S. Federal Bureau of Investigation to ensnare an arms
dealer with ties to the Islamic resistance movement Hezbollah, based in Lebanon, which the U.S. and several other governments consider a terrorist organization.

In 2004, U.S. prosecutors charged Naji Antoine Abi Khalil with attempting to purchase and ship night-vision goggles and other military equipment from the U.S. to Hezbollah. Khalil's
ties to al-Madina's money-laundering operations came to light when he bragged to agents and informants that he traveled the world picking up cash to be delivered to the bank on behalf
of Hezbollah and Russian mobsters. According to court papers, Khalil, who has since pleaded guilty, accepted $100,000 to launder from agents as part of a sting and told them the
single biggest delivery he had made to the bank was $160 million in cash.

But those amounts pale when compared to the piles of cash laundered by Iraqi officials and their partners in illegally gaming the UN's oil-for-food program. Designed for humanitarian
reasons to allow Iraq to sell oil through vouchers that could be used to purchase food and medicine, the program became a hotbed of corruption that Saddam and his loyalists used to
earn illegal money.

By the late 1990s proceeds flooded the Middle East as favored allies of the regime received coupons good for oil purchases at lower-than-market prices. Investigations into the program
found rampant corruption on the part of UN officials, Middle Eastern government officials, and oil companies. The son of Lebanese President Lahoud was implicated, as were other
prominent Lebanese and Syrian officials and businessmen. And al-Madina served as a place for them to hide the proceeds.

Several sources, including one alleged conspirator in the oil-for-food scandal, who refuses to let his name be used for legal and safety reasons, put the amount transferred and
laundered through al-Madina at more than $1 billion, with a 25% commission going to Syrian officials and their Lebanese allies. The source says that among the recipients of this money
were Bashar Assad's brother Maher and the head of military intelligence in Lebanon at the time, Ghazi Kanaan. (Kanaan committed suicide last October after Mehlis questioned him about
the plot to kill Hariri.)

To protect this operation, Koleilat had developed a network of graft that shocked even a Lebanese society comfortable with questionable business dealings. She threw dinners where
guests received Rolex watches, and she gave luxury cars to friends and officials.

The graft was so widespread that one security official described the parking lot of his office during that era as a "Mercedes dealership." Some bank records point to 155 pieces of
real estate--villas, apartments, hotels, and condos--purchased or distributed by Koleilat and her brothers. The Koleilats also had five luxury yachts and as many as 194 cars and
motorcycles, not including the gifts to friends, associates, and greedy officials.

Koleilat and the al-Madina plotters needed protection and sought out high-level officials who could help them, says a former employee of the Koleilat family who witnessed many of
their dealings. The source, who requested anonymity because the matter is still considered dangerous to discuss in Lebanon, says one of those was Jamil Sayeed, a former director of
Lebanese internal security, since arrested on suspicion of plotting Hariri's murder. (Sayeed refused to comment.)

"Rustom Ghazali would receive money, cars, jewels, and hunting trips," the source says. "People used to come and wait in the office. The big shots would get checks; the lower people,
like generals and officers, would get cash. This situation went much higher than Ghazali. It was a way for Maher Assad and others to profit from Lebanon and from the Iraq factor."

Several Syrian officials mentioned in the Mehlis reports can be tied to money from al-Madina by documents supplied to FORTUNE by the bank's owners. Ghazali's three brothers were
issued four ATM cards linked to a fake account with a $2,000 daily limit for withdrawals, which they made each day from December 2002 to January 2003, according to one document. One
of the four cards had a total yearly cash withdrawal of $8 million.

Ghazali's brother Mohammed also received a money transfer for $1,091,000 from the bank on Jan. 20, 2003. Investigators and lawyers for the bank's owners say that during these final
months, Ghazali and other top officials decided that the bank's failure was inevitable and acted quickly to drain the remaining monies. One bank employee says that he witnessed Rustom
Ghazali demanding a $300,000 payment just after the bank had been put under Central Bank management, a payment approved by regulators.

Among the 155 suspicious real estate transactions flagged by investigators is the transfer of an apartment valued at $2.5 million from the Koleilat family to a friend of Maher Assad's
office manager--a transfer the bank's lawyers say they believe was intended to put it under Maher Assad's control. Lebanese political and security officials say that the sealed
documents show far more money and property transferred to Maher.

"The entire file on Madina is now at the Ministry of Justice, except for the key parts that implicate Maher Assad, which are still being held in the Central Bank, because people are
afraid of being killed over it," says Hamade, the Telecommunications Minister. "While there is not the same level of threats, the Syrian presence remains, and judges are very cautious
about this case." (Efforts to reach Maher Assad and the Ghazalis for comment through several Syrian government agencies were unsuccessful.)

Other documents show transfers or transactions made by the bank to the benefit of Lahoud's son--allegations he refused to comment on--and to Lebanese security officials, including the
four generals arrested last year on suspicion of participating in the plot to kill Hariri. Current Finance Minister Jihad Azour, a friend of Hariri's, insists that only today, with
Syrian troops out of the country, can Lebanon commit to a full investigation. And he believes fear of such an investigation drove some of the murderers. "The risk of reopening the
file could have led to this murder," Azour says. "Al-Madina reached the biggest people in Lebanon and Syria."

Azour says Hariri wanted to pursue an investigation into al-Madina and other cases of corruption and would have gone forward, even knowing the danger. "Hariri wanted this file to
reach its conclusion," Azour says. "He was concerned about the scandal's ramifications. It has a very negative impact on the status of the Lebanese banking system. And it's important
that the case be treated in an extreme way to fix this perception."